Rupert Murdoch’s publishing empire News Corp (NWSA) announced on Monday that it has agreed to acquire the books and media segment of Houghton Mifflin Harcourt (HMH Books & Media).
The company will be integrated into the existing book publisher HarperCollins Publishers, a subsidiary of News Corp.
The sale is valued at $349 million (£252.2 million) in cash and the acquisition is subject to customary closing conditions, including regulatory approvals.
HMH Books & Media has one of the most extensive and successful backlists (reprints of previously published titles) in the publishing industry, including works by George Orwell, The Lord of the Rings trilogy, and other titles by JRR Tolkien. HarperCollins currently owns the rights to Tolkien’s works in the British Commonwealth.
According to News Corp, backlists have proven to be a sustainable and growing source of revenue for publishers, enabling high margins and cash flows, particularly evergreen titles with broad, enduring and global appeal. The label has a long history of high profitability.
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In 2020, HMH Books & Media experienced strong growth with net revenues of $191.7 million and adjusted EBITDA of $26.6 million, based on public filings. Over 60% of HMH Books & Media’s revenues were generated by its backlist.
According to News Corp, HMH Books & Media also has a top-notch slate of titles in the lifestyle and children’s segments, with recent bestsellers such as “Antoni in the Kitchen,” “Instant Pot Miracle,” “Wow in the World: The How and the Wow of the Human Body,” “Little Blue Truck’s Valentine” and the Click series of middle-grade graphic novels.
HarperCollins expects immediate cost savings that will total more than $20 million annually within two years, including cost efficiencies in manufacturing, distribution and other areas from the sale.
Robert Thomson, CEO of News Corp, said: “There is a renaissance in reading and listening to books and we believe that HMH Books & Media’s brilliant backlist and world-class frontlist have enduring and increasing value. Timeless writing is a current revenue stream and the potential to create highly profitable audio and video works grows with each passing digital day.”
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“The HarperCollins collection is expanding for children and young adults, giving authors around the world a greater platform for their creativity and ingenuity.
“In an era when new monopolies threaten the creative market, expansion is crucial. That’s why we welcome JRR Tolkien, Virginia Woolf, George Orwell and many, many other renowned authors to HarperCollins.”
The deal is the latest consolidation in the publishing world and follows News Corp’s failed attempt to take over Simon & Schuster last year. The publisher was bought by rival Penguin Random House from ViacomCBS for £2.18 billion and is currently under scrutiny by UK competition authorities.
